Shipbuilder hit by UAE cancellations and write-offs

Singapore shipbuilder Penguin International hurt by the loss of two contracts with the Abu Dhabi National Oil Company (Adnoc).

Penguin International has sold its 75 per cent stake in a Dubai joint venture, Penguin Marine Services. Paulo Vecona / The National

Penguin International, the Singapore shipbuilding and marine services company, has reported a net loss of S$63.2 million (Dh182.7m) for last year.

The figures came after it lost two contracts with the Abu Dhabi National Oil Company (Adnoc) and wrote off losses from its involvement with The World islands project.

The company also disclosed that last month it sold its 75 per cent stake in a Dubai joint venture, Penguin Marine Services. The Demat Group, based in Sharjah, owned the remainder.

Penguin Marine had won an exclusive contract from Nakheel, the property company owned by Dubai World and the developer of the artificial islands off the coast of Dubai, to provide transportation and logistics support to the developers of the islands. The annual fee for the contract was the larger of either Dh5 million or 15 per cent of its profits, but with the onset of the property crash in Dubai it suffered losses.

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The situation spilled into the Dubai World Tribunal, set up to handle cases involving the conglomerate, last month. Penguin Marine had asked the Tribunal to waive its contractual right to pay the annual fee to Nakheel because the project was effectively "dead", but the three-judge panel refused the request.

In its financial statements, Penguin International said it had written off S$29.3m for "laid up vessels" and a provision for licence fees to Nakheel.

Penguin International was also hit by the cancellation of two ship-building contracts with Adnoc. It had been hired to build two safety standby rescue vessels, but the deal was terminated last summer.

That hit the company's revenues after having to reverse S$32.3m of revenue it had recognised previously as associated with the contract. It reported S$75.7m of revenue for last year, down 32.4 per cent from 2009.